Fundtech Ends Merger Agreement With S1, Takes Offer from GTCR

After receiving an acquisition offer from BankServ's majority shareholder GTCR, Fundtech intends to terminate its previous merger agreement with S1.

Jersey City, N.J.-based payments company Fundtech just announced that it intends to end the merger agreement that it had entered into with Atlanta-based payments provider S1 Corporation last June. This termination is a result of an acquisition offer from GTCR, a Chicago-based private equity firm that recently became the majority shareholder of SaaS banking and payments systems BankServ.

GTCR is offering $23.33 per share for Fundtech, an deal that Fundtech's board of directors has already deemed superior to the agreement with S1. GTCR says that it intends to combine Las Vegas-based BankServ with Fundtech to create a leader in the global payments industry. The combined company would be headquartered in Jersey City, N.J. and take the name Fundtech.

S1 has received notification of Fundtech's intent to terminate the companies' merger agreement and has five business days to make a counter proposal. The company says that it's consulting its legal and financial advisors and is reviewing its options. The deal between Fundtech and GTCR is expected to close in the fourth quarter of 2011 if all conditions are met.

This announcement comes in the midst of a bidding war over S1. Last July, New York-based international payments systems provider ACI Worldwide put an unsolicited bid on S1, rivaling its agreement with Fundtech. Despite the ACI's increasingly aggressive pursuit, S1 had held steady on its intent to merge with Fundtech. What will happen with S1 and ACI in light of these most recent developments It remains to be seen.